Time for porcine solidarity among the PIIGS

I’m back in pound-land after five days in the euro zone’s troubled periphery (Greece and Ireland).

The credit boom was clearly criminally misused by the political elites of these nations ( excessive public spending in Greece, and housing in Ireland) but, as Shakespeare’s Polonius pointed to in advising “neither a lender nor a borrower be”, loans are a two-party affair.

Problem loans are a problem for both sides of the equation. And so some pain, austerity, economic reform and more is the price that the PIIGS (Portugal, Italy, Ireland, Greece, Spain) must pay for becoming over reliant on the kindness of strangers.

But the past days must focus the microscope of accountability firmly over the incompetence of those actually running the eurozone.

Germany, Osterreich (Austria), Others (Netherlands, Finland) and Frankfurt (the ECB) are the GOOFs, who have turned a crisis in small countries that frankly should be irrelevant to the world economy, into an existential crisis for the second biggest currency area. Frankfurt especially, but the ECB needs a post all of its own.

Let’s focus on dithering Berlin today. The polls are clear. Germans don’t like bailing out lazy Mediterreaneans. Except, actual election results tell a different story. The politicians who say that, (Berlin election slogan: “Keine Eurobond”) the free democrats, will on current numbers be wiped out of the Bundestag, replaced by the Pirate Party as occurred in the Berlin election.

The opposition social democrats have waxed and waned on eurobonds, but the ex-finance minister Steinbruck backs them, subject to conditionality as does ex-Chancellor Schroeder. The Green Party backs them too, alongside Germany’s export lobby. As Steinbruck is endorsed by Helmut Schmidt, and the leading SPD candidate to challenge Mrs Merkel for the German chancellery, this matters.

I was taken aback by his critique of Mrs Merkel (remember he served as her finance minister in a grand coalition) in the debate approving the EFSF in the Bundestag. Essentially he critiqued her dithering over the crisis.

Porcine solidarity

So do not assume that of the two overwhelming instincts of Germany post-war, the aversion to debt/ inflation will trump its commitment to European solidarity. The euro has served Germany well in recent years, with a domestic market of 350m, falling unemployment and bumper tax revenues, affording Germany the opportunity of an imminent €6bn tax cut.

My essential point is that Germany, France and the ECB are meddling in the domestic politics of Greece, Italy, and in the case of repaying the Anglo-Irish bond, Ireland too. So there is surely a case for those countries pushing back on incompetence in the core too.

Porcine solidarity, is a concept, accidentally invented by myself (with the help of Irish commentator Fintan O’ Toole) on stage at the Kilkenomics festival of economics in Ireland over the weekend.

I flew in straight from Athens to speak at a session of “whether Ireland belonged with the other PIIGS”. I feel slightly uncomfortable about the PIIGS epithet but, like some racial epithets I suggest that those affected reclaim it for themselves and use it to subvert the message that the Eurozone periphery is full of workshy, credit-guzzling layabouts.

The porcine solidarity movement could point to the fact that decisive action in Germany could have simply and expensively buried this crisis a year ago. Now the eventual cheque will be much more expensive for German taxpayers. Italian government bond yields near seven per cent is the key metric here. As is the fact that German industrial production fell by the fastest amount in September since the post-Lehman trade cataclysm.

Total failure, self-inflicted. The three little pigs need some huff and puff, and they will find more support than you might imagine in Germany.

Follow Faisal’s thoughts on the euro zone crisis on Twitter: @FaisalIslam